Chevron Corporation has taken a significant step towards its divestment target by announcing the sale of key Canadian assets to Canadian Natural Resources Limited (CNRL) for US$6.5 billion.
This move comes just a week after Chevron’s US$300 million sale of Alaska assets to ConocoPhillips, demonstrating the company’s commitment to its strategic goal of divesting US$10-15 billion in assets by 2028.
The sale includes Chevron’s 20 per cent non-operated interest in the Athabasca Oil Sands Project and 70 per cent operated interest in the Kaybob Duvernay shale formation.
Mark Oberstoetter, Upstream Research Director at Wood Mackenzie, noted that the inclusion of both assets in a single deal was unexpected, suggesting Chevron’s preference for a cash transaction and limited interest in the standalone Duvernay package.
This divestment aligns with Chevron’s broader strategy to optimise its global energy portfolio and focus on core assets.
The company retains its offshore Canada stakes for now, indicating a selective approach to its Canadian operations.
For CNRL, this acquisition marks a significant expansion of its portfolio:
- Total spending of US$33 billion across 23 deals in the past two decades
- Projected to enter the top 25 rankings of global oil and gas producers
- Positioned as the third-largest non-Major or National Oil Company globally
While the deal strengthens CNRL’s market position, it also impacts its financial structure:
- US$4 billion of debt was added to finance the transaction
- Pro forma exit gearing is expected to rise from 19 per cent to approximately 30 per cent by the end of 2024
- Projections indicate net debt declining below CA$15 billion by the end of 2025
- Free cash flow shareholder pay-out anticipated to increase to 75 per cent in 2025 and 100 per cent by 2027
This transaction represents a strategic shift for both companies, with Chevron progressing towards its divestment goals and CNRL solidifying its position as Canada’s top oil and gas producer.
